Kill Cliff Fuels Up With Sunrise Investment

Since its inception in 2011, post-workout recovery drink Kill Cliff has largely built its brand through the fitness channel, positioning itself for the athlete demo in gyms across the country. After securing a major financial boost, the brand is now shifting its focus towards making a play for the mainstream and going deep in the natural channel.

Sunrise Strategic Partners, an investment firm with a focus on healthy and sustainable foods, announced Thursday that it has acquired a minority ownership stake in Kill Cliff. The deal marks the eighth investment for the young firm and the first beverage brand addition to its portfolio. Sunrise, which began in 2016, has also backed brands such as Perky Jerky, Pure Growth Organic, and Maple Hill Creamery.

Financial terms of the deal were not disclosed, but Sunrise’s investments range between $10 and $25 million in revenue, Hughes said. Kill Cliff was seeking a $10 million raise at the time of the deal, according to Nick McCoy, co-founder and managing director of Whipstitch Capital, which facilitated the investment.

Speaking to BevNET, Sunrise co-founder and CEO Stephen Hughes — who previously founded Boulder Brands and was an early investor in Suja — said the firm had been looking long and hard at the beverage space to find the right company. Kill Cliff, he said, filled a vacuum in the market for a no-sugar, low-calorie recovery drink. Hughes said he saw the brand as a serious competitor to Gatorade and Powerade for the millennial consumer, particularly among athletes as well as mothers looking for healthier sports drinks for their children.

Kill Cliff’s formula, which is all-natural and sweetened with erythritol, hit the right notes for Hughes. But it was the brand’s origin and activism — it was founded by former Navy SEAL Todd Ehrlich with a focus on giving profits back to the Navy SEAL Foundation — that closed the deal.

“We like the product a lot, but then you get to the back story,” Hughes said. “I’ve been building brands for 40 years and I don’t think there’s been a back story I’ve seen that’s more authentic and legitimate.”

According to McCoy, Kill Cliff had “reached the stage” to expand its business, having achieved solid penetration in the fitness and military market, e-commerce sales, and a promising start in the natural channel, along with strong revenue.

“We thought the timing was just perfect for this round,” he said.

Until recently, the bulk of Kill Cliff’s business had been centered around CrossFit gyms, but that has since expanded into Gold’s Gyms, Powerhouse Fitness, Lifetime Fitness, as well as specialty stores such as Vitamin Shoppe, CEO Joe Driscoll told BevNET. Over the past nine months however, most of the company’s distribution gains have been in natural and specialty grocery retailers.

The brand is currently available in the Rocky Mountains and South regions of Whole Foods, with Northern California set to join in the fall. Kill Cliff is currently in talks to add the Pacific Northwest region as well. In the conventional channel, the brand is also expanding into Giant Eagle, Hy-Vee, Kowalski’s Markets, and Coburn’s.

“The retailers like Whole Foods really understand the convergence of natural, healthy beverages,” Driscoll said. “What has historically been ‘sports nutrition’ is helping us lead the charge to develop a whole new category.”

Driscoll, who took the CEO role in March 2016, has also overseen changes to the company’s product line. Earlier this year, Kill Cliff stopped production of its RTD coffee line, which he said was not well suited to gyms and would have fared better if it came out today as the company embraces grocery. However, while there are no immediate plans to revive the coffee offerings, Driscoll said there are new innovations in the pipeline.

According to Hughes, Kill Cliff’s strong branding, including its evocative “KILL THE QUIT” ad campaign was another selling point for the brand.

Upping its marketing spend, the company ran an ad on CBS Sports during the CrossFit Games, and continues to push digital and social media channels, Driscoll said.

Sunrise’s investment is also good news for previous Kill Cliff investor Sherbrooke Capital. Speaking to BevNET, Sherbrooke managing general partner John Giannuzzi said he was “very excited” about the new financing and said he believed it would create “the opportunity to take the company to the next level” as part of Kill Cliff’s mainstreaming strategy. According to Giannuzzi, Kill Cliff’s natural channel penetration will be “very aggressive” as it expands. Sherbrooke continues to invest with the company.

“We’re very fired up, we think this is a very big idea and we think it’s ready to go,” Hughes said. “When we first started talking to them they only had one region of Whole Foods and now it’s looking like they’re going to have four or five. So the snowball is teetering at the top of the hill and we think we can help Joe and the team accelerate that.”